The next step down in oil prices is coming? The MAP predicts $25 oil for 2019. We might just get $25 oil this year. That would be the end for the oil industry?

In the event of $25 crude for any extended period the only functioning producers remaining would be those receiving government subsidies. Those subsidies would have be huge, and in the present situation of massively over indebted central governments most likely fatal! We are presently at Peak (description below) and a significant decline in price at this juncture would result in a Post Peak production curve resembling a Seneca Cliff,

Peak is occurring because declines in existing formations have become greater than what new oil can be brought on line as replacement. Shale has been the only source to demonstrate production increases in more than a decade. To prevent Peak it has been necessary for Shale to replace both its own legacy decline, and that of conventional. Shale is no longer able to do that. In 2019 Shale will only have the capacity to replace 1.29 mb/d of conventional decline. 2018 witnessed conventional declines of at least 3% (the IEA states 4.5% per year which was not used here because it may have included Shale) or 2.12 mb/d. To prevent Peak Shale will fall short by at least 0.83 mb/d in 2019; by over 1.50 mb/d in 2020, and over 3.0 mb/d in 2021.

A simple calculation demonstrates the situation:

2018 Shale production - 8.03 mb/d2017 " " - 6.44

2017 - 2018 increase (8.03 - 6.44) 1.59 mb/d

2017 - 2018 production decline that had to be made up during 2018 for production to begin increasing - 6.44 mb/d * 0.178 = 1.15 mb/d. (Shale declines 89% in its first five years 0.89/5 = 0.178 per year)

17 months with the price of WTI over the MAP and 17 months without much growth. The world is getting poorer.

The only growth we will see from here on out will be when the central banks throw another bale of their confetti to the market. Then everyone will dance in the streets until MikiDee runs out of soy bean meal, and marble dust.

While there might be lots with the underlying principles that we can agree on about new energy needing more energy to produce it etc, it seems to me that for the MAP calculations to be wrong for 17 months means that there is some fundamental flaw in the assumptions going into that model. For me the Hill Group (or individual) would have a lot more credibility if they were honest enough to update the parameters of the model they are using as new data becomes available.

Short has made clear that from 2012 with more energy needed to extract energy from oil than was derived from it, the link between oil production and economic activity broke. Hence, the capacity to the project the oil price onward becomes untenable because of this and the commensurate huge money infusions distorting prices and valuations

Looking at Shale's production increase over the last 6 months, it is happening at present. Shale can no longer make up for its 1.43 mb/d 2018 legacy decline and conventional's decline. Total US production has only increased by 1 mb/d over the last half year, and Shale is running short on rigs and money. Peak will really stand out on the $/barrel vs consumption per capita graph. That 60 year trend line is breaking. Either the price of oil takes a serious fall, or a lot of people will be going without oil.

The good news is that Venezuela doesn't have old decaying nuclear power plants.

They don't have nuclear, they don't have hydro, and they don't have oil. They do have Russian S300 which they are going to pay for with cocoa leaves, and monkey crap. Getting straight back to the stone age requires a special talent that the Venezuelans seems to have in abundance.

Hi Shorty,Can you be specific?Like peak second? Minute? Day? Month? Year? Decade? Century? Millenium? Geologic era?at the moment you haven't defined a time frame, so the time resolution may be infinite, like your saying peak oil is somewhere between the start and end of the universe.

They don't have nuclear, they don't have hydro, and they don't have oil.

how about getting your facts straight?

Venezuela has 302 billion barrels of proved oil reserves. Production is still around 1.4 million bbls/d (down from 2.2 MMbbl/d in mid-2016) despite all of the economic issues and sanctions, that puts it as 12th largest oil producer in the world.

Venezuela also has the second highest hydropower capacity in South America at 15,000 MW. There are 6 dams that are set up to supply power. The current power outages are a symptom of lack of maintenance in their power facilities, not much different than the fact that lack of maintenance and reinvestment in the oil fields has been responsible for the considerable decrease in production.

Venezuela doesn't have nuclear, doesn't have oil and doesn't have hydro, and we know that because the lights are out! Anymore minor facts you are having trouble getting your head wrapped around? A lot of oil in the ground, and a lot of water flowing into the ocean doesn't help a bit when you are sitting in the dark. In other words their EROI is now zero, but according to your argument that since oil companies never consider EROI, that is completely irrelevant. We now know to expect brain death to occur in conjunction with falling ERoEI, and the zoombie population is going to thrive. If there is a Zoombie ETF the future looks bright, and it can be hedged with road kill.

Venezuela doesn't have nuclear, doesn't have oil and doesn't have hydro, and we know that because the lights are out! Anymore minor facts you are having trouble getting your head wrapped around?

missed a day at your ESL class did you? They "have" lots of oil and the "have" lots of hydro. What they do not have (for the last day and a half) is electricity. You do know how that works don't you? A power outage doesn't mean all the oil reserves are gone or that the hydro stations no longer work.

In other words their EROI is now zero, but according to your argument that since oil companies never consider EROI, that is completely irrelevant.

Of course it is irrelevant as the minute there is a new government in place there will be hordes of oil companies lining up to do deals once again. I talked to a couple of gents who have long experience back prior to the latest nationalization and they have been approached by several large oil and gas companies to help them get prepared for that inevitability. If you are now at calculating EROEI on any event that might transpire you have woefully misunderstood the concept.

The economy has reached the point where CB currency creation can no longer compensate for organic growth decline. It occurred at an ERoEI of 8.1:1. It also appears to have occurred about the time that legacy declines overwhelmed new production increases. Reserves that will be extracted are declining by 36 Gb a year. $60 oil is breaking the economy.